Loan Modification And Foreclosures – Big Lenders Get a Small Slap on the Wrist

By Carla Ghosn, CEO and Founder of MyCaal.com

Following numerous months of ping-pong’ing back and forth regarding loan modification and housing market accountability, an AG settlement over foreclosure that is intended to punish big banks for foreclosure abuses may be close to being finalized. The precise details of the arrangement are still to be made public, but some information is being made available. The settlement is between large banks, and the government along with a range of state attorneys general.

While the specifics of the arrangement are still subject to change, here is how matters currently stand. This is according to people who have been briefed on the talks in question, while not being given the go ahead to divulge the information publicly.

The bottom line is this: if you had any expectation or hope of big banks finally being held to real accountability for their many years of foreclosure misconduct, filing fake documents in court, and unethical and unlawful practices, this may not be the time to be holding your breath. In fact, a few state attorneys general were so unsettled by the tone of this deal that they withdrew from the negotiations. State officials from Nevada, NY, and Massachusetts held serious concerns that the settlement would remove grounds for any further investigations into the unlawful practices of banks, and would therefore constitute more of a blessing to them than anything else. By the looks of things, these state officials were justified in being concerned.

The AG foreclosure settlement in question is said to be in the range of $25 billion, which is in itself laughable when weighed against the sums of money that have been involved in frauds and bail-outs in recent years. Of this amount, the actual immediate cash amount that banks would be expected to pay would be a measly $3.5-$5 billion. This amount would be spread between about 12 financial institutions. The remaining $20 billion is comprised of credits to banks which consent to reducing a pre-arranged amount of principal owed on home loans, those that the lenders either own themselves, or service on behalf of private investors.

I could go on about the nitty-grittys of this settlement, but this is what it will amount to in a nutshell. Firstly, it would mean that once the settlement is reached, big banks are then forever more shielded from any further investigations into financial misconduct and fraud. In essence, they pay a nuisance of a fine, and get a humungous ‘get-out-of-jail-free’ card. Secondly, homeowners who have had their homes foreclosed on since September of 2008 will receive remuneration to the tune of $1,500.00. Yes, unfortunately you read that quite correctly.

Now let’s just think about that for a moment:

Let’s say you’re reading this as a homeowner who has been wrongly foreclosed on, or even been forced into a short-sale through which you have lost tens or even hundreds of thousands of dollars.

Maybe you were foreclosed on while you had a loan modification application pending.

Perhaps you were granted a loan modification and successfully fulfilled the obligations of your Trial Period Plan, but your modification was never converted to a permanent one, and you lost your home.

You could be one of the millions of Americans who never received any constructive feedback or support from your bank, and who was left with no choice but to file a loan modification application entirely in the dark, and entirely in vain.

If any of these or similar scenarios resonate with you, what are you to make of the offer of $1,500.00 from the big banks of the USA as being representative of righting all the wrongs of the past? I’ll tell you what I would make of it. I think it’s outrageously pathetic! This settlement, if concluded, will amount to banks throwing a few scraps and crumbs in the direction of devastated and ruined lives, while enjoying the protection of freedom from any future investigations into their wrongdoing, ever. These are Wall Street banks: allegedly too big to fail! If this does not anger you as an American homeowner, past or present, nothing on God’s green earth will.

Homeowners who are presently engaged in a fight to save their home and dream owe it to themselves to submit a loan modification application that is as accurate, comprehensive and empowered as possible. Make no mistake, the business of saving your home in America these days is a fight indeed, but it’s a fight that can be won nonetheless.

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